(updates with details on climate change)

By Victoria Thieberger and Wayne Cole

COOLUM, Australia, Aug 3 (Reuters) - A top U.S. official said repercussions from the U.S. subprime mortgage rout seem contained, and renewed calls on China to hasten progress toward a free and floating currency regime.

Asia-Pacific finance ministers, meeting at a golf resort on Australia's Sunshine Coast, also said climate change was a major international challenge and that it was important to go beyond the Kyoto Protocol to fight global warming.

U.S. deputy Treasury Secretary Robert Kimmitt won backing from Japanese Finance Minister Koji Omi for the plea for a more flexible yuan, but Beijing said it would proceed at its own pace.

"We will continue with our currency reform, not because of demand from other countries but because of our own economic needs and developments," Finance Minister Jin Renqing told reporters.

Kimmitt's boss, Treasury Secretary Henry Paulson, visited China this week pressing the case for a floating yuan. Many U.S. lawmakers and manufacturers complain the yuan is too low, giving China an unfair trade advantage.

The Chinese central bank, which sets the yuan's trading range, has allowed it to rise about 5 percent in the past year.

Kimmitt joined a chorus of officials seeking to calm financial markets, wracked by fears the fallout from the U.S. subprime mortgage crisis may hurt the global economy.

"What we are seeing now is a reassessment and repricing of risk, which we believe is proceeding in an orderly fashion and therefore the effects on the overall U.S. economy appear to be contained," he told a closing briefing of the 21-member Asia-Pacific Economic Cooperation (APEC) meeting.

YEN AGAIN

The yuan was not the only currency to be argued over, with South Korea's Finance Ministry saying that the yen <JPY=> was undervalued and was contributing to global imbalances.

"(South Korea) emphasised that the yen was weak despite Japan's recent economic recovery and big current account surplus due to excessive yen carry trades, and that, therefore, it was deepening global imbalances and becoming a source of uncertainty in international financial markets," the ministry said in a statement released in Seoul on Friday.

Japan's Omi said South Korea was the only APEC member to raise the risks of carry trades, where investors borrow in low-yielding yen to invest in high-yielding currencies. The final APEC communique made no mention of the yen, but did note that flexible exchange rates would help reduce global imbalances such as excessive savings in Asia and a lack of saving in the United States.

The statement also warned that the rise of protectionist sentiment around the world was a serious threat to growth and living standards.

CLIMATE FOR CHANGE

Originally, long-term goals such as managing the economic impact of climate change topped the agenda but the ructions in financial markets elbowed their way to the fore.

The ministers tried to refocus on climate change at the concluding news conference. China put the onus on developed countries to curb emissions.

"I think developed economies have a responsibility ... to assist developing economies to solve these issues," said China's Jin, adding that they are working with major economies to develop greener energy.

Still, Australian Treasurer Peter Costello, who chaired the meeting, said China had agreed to consider market mechanisms to deal with carbon emissions, which he termed a "breakthrough".

China, India and other major developing nations said in June they backed a G8 plan to agree on a timetable for a new pact to combat global warming at a major U.N. meeting in Bali, Indonesia, this December.

The idea is that countries would agree on a new pact by 2009 so it could take over from the Kyoto Protocol's first phase ending in 2012.

Finding a formula that satisfies both rich and developing nations will be tricky, given the growing pressure on industrial nations to cut greenhouse gas emissions.

The APEC ministers recognised the need to take strong and early actions to fight climate change and said in a communique that "it is important to establish an effective framework beyond the Kyoto Protocol under the U.N. climate process". (Additional reporting by Fayen Wong)

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